Correlation Between Investar Holding and LCNB
Can any of the company-specific risk be diversified away by investing in both Investar Holding and LCNB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Investar Holding and LCNB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investar Holding Corp and LCNB Corporation, you can compare the effects of market volatilities on Investar Holding and LCNB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Investar Holding with a short position of LCNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investar Holding and LCNB.
Diversification Opportunities for Investar Holding and LCNB
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Investar and LCNB is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Investar Holding Corp and LCNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCNB and Investar Holding is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Investar Holding Corp are associated (or correlated) with LCNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCNB has no effect on the direction of Investar Holding i.e., Investar Holding and LCNB go up and down completely randomly.
Pair Corralation between Investar Holding and LCNB
Given the investment horizon of 90 days Investar Holding Corp is expected to generate 1.09 times more return on investment than LCNB. However, Investar Holding is 1.09 times more volatile than LCNB Corporation. It trades about 0.03 of its potential returns per unit of risk. LCNB Corporation is currently generating about 0.02 per unit of risk. If you would invest 2,072 in Investar Holding Corp on August 28, 2024 and sell it today you would earn a total of 364.00 from holding Investar Holding Corp or generate 17.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investar Holding Corp vs. LCNB Corp.
Performance |
| Timeline |
| Investar Holding Corp |
| LCNB |
Investar Holding and LCNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investar Holding and LCNB
The main advantage of trading using opposite Investar Holding and LCNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investar Holding position performs unexpectedly, LCNB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LCNB will offset losses from the drop in LCNB's long position.| Investar Holding vs. Magyar Bancorp | Investar Holding vs. Home Federal Bancorp | Investar Holding vs. Community West Bancshares | Investar Holding vs. First Northwest Bancorp |
| LCNB vs. Affinity Bancshares | LCNB vs. Main Street Financial | LCNB vs. Mainstreet Bank | LCNB vs. Oak Valley Bancorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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